Life Insurance is a contract between the policy holder (insured) and an insurance carrier (insurer), which provides a money benefit in the case of critical illness or the death of the policy holder. The death benefit can be paid through several payments, or typically in a lump sum payment to the beneficiary or beneficiaries identified in the contract. The insured provides premium payments to the insurer in order to keep the contract in force.

There are five basic contracts that can be used for protection, investing, or for both purposes. The five contracts are: Term Life Insurance, Whole Life Insurance, Universal Life Insurance, Variable Life Insurance, and an Endowment. Additional terms may be added to the contract in the form of riders.

United Benefit Solutions can have one of our licensed agents provide you with a detailed review of each type of life contract, benefit options, cash values, tax implications, and other contract details. We will evaluate your individual needs, and help determine what insurance contract would be best for you.

Term Life Insurance: Term Life Insurance, or sometimes referred to as Temporary Life Insurance, is a life insurance contract that insures the policy holder for a specified amount of time for a specified premium. The policy is strictly used for protection, and there is no cash value to the contract.

Whole Life Insurance: Whole Life Insurance, a form of permanent insurance, is a life insurance contract that provides protection to the policy holder with fixed annual premium. The policy also provides a cash value that accumulates at a fixed rate defined in the contract, and may be accessed by the insured in the form of a policy loan. Any loan left unpaid will reflect the value of the death benefit. The cash value is not paid to the beneficiary of the policy, and there is a dividend option, which can be used to increase the death benefit paid to the beneficiary.

Universal Life Insurance: Universal Life Insurance is intended to provide permanent insurance, which includes flexible premium payments, and a possibility of a higher cash value. The cash reward may increase with premium payments, which are effected by prevailing interest rates, or in an investment option based on the financial markets the policy holder chooses. All mortality costs and administrative fees are known to the policy owner, and premium payments can be affected by the cash value built up in the policy. There are a few factors pertaining to premium payments, cash value, and non guarantee of benefits that should be considered when purchasing this form of life insurance.

Variable Universal Life Insurance: Variable Universal Life Insurance is a type of Universal Life insurance that provides no guarantee of benefit to the policy holder. The cash value aspect of the policy is held in a separate account, which is usually associated with a series of mutual funds that are directed by a fund manager. The specific portfolio of investments is specified by the policy holder, and can reflect the value of the policy both positively and negatively based on the performance of the investments in the fund.

Endowments: Endowments are a type of policy that allows the cash value to equal the death benefit at a certain age. This age is termed the “Endowment Age”, and reflects higher premium payments as the payment periods are shorter due to the endowment date being earlier in time than standard life contracts. The payments are made at the endowment age, or at the end of a specified period of time.

Accidental Death and Dismemberment insurance is a limited life insurance contract that offers a death benefit in the event the policy owner accidentally dies or is injured. The limitations of death and injury are defined in the policy, and often are restricted when dealing with health issues and suicide. This type of coverage can be purchased separately, or added to a life insurance policy in the form of a rider.